Issue #108

One is transforming TV ads; the other is the "AI brain" for the Global 2000.

The most durable opportunities aren't found in the hype cycles of social media, but in the invisible layers of high-margin software that automate billion-dollar industries. We are moving into an era of "Applied Intelligence," where the value lies in two specific pillars: how brands talk to their customers and how they measure every dollar spent.

In this edition, we break down two software powerhouses that are quietly dominating their respective niches:

👉 One company is turning the "dumb" television in your living room into a precision-engineered performance marketing machine.

👉 The other is acting as the central nervous system for the world’s largest enterprises, unifying every customer interaction into a single, AI-powered brain.

👉 Both have recently crossed the threshold into GAAP profitability, possess massive cash reserves, and are currently trading at valuations that Wall Street analysts find increasingly impossible to ignore.

Read on as we analyze the "Software Backbone" of the 2026 economy—and why these two stocks represent a sophisticated play on the future of AI-driven commerce.

MNTN (NYSE: MNTN)

MNTN (NYSE: MNTN) is a high-growth marketing software company that is fundamentally redefining the Connected TV (CTV) advertising landscape. By transforming television into a performance-based marketing channel, MNTN allows brands—particularly small and mid-sized businesses (SMBs)—to run TV campaigns with the same precision, measurability, and ease typically reserved for search and social media.

Business Model and Revenue Streams 📦

MNTN’s business model is centered on its proprietary "Performance TV" platform, which serves as a self-service software suite for advertisers. The company’s primary goal is to move TV advertising away from traditional, opaque "branding" buys toward "direct-response" outcomes. Its revenue is primarily driven by:

• Performance TV (Platform-as-a-Service): This core revenue stream is generated when brands use the platform to buy, manage, and optimize CTV ad inventory. MNTN charges based on the advertising spend flowing through the platform, creating a scalable model where revenue grows alongside the customer's campaign success and retention.
• Creative-as-a-Subscription (CaaS): Through its integrations and the acquisition of QuickFrame, MNTN offers subscription-based access to high-quality video production. This removes the "creative barrier" for smaller brands, ensuring they have a steady stream of fresh ad content to fuel their TV campaigns.

The company is currently navigating a complex macroeconomic environment. While high inflation and interest rates often lead to tightened marketing budgets, MNTN’s focus on "performance" acts as a hedge. When budgets are tight, advertisers shift away from "awareness" ads and toward channels like MNTN that can prove a direct Return on Ad Spend (ROAS). However, a significant downturn in consumer spending still poses a risk, as SMBs—MNTN’s core demographic—are often the first to scale back during a recession.

Recent Performance and Corporate Developments 📈

MNTN delivered a landmark performance in its most recent fiscal reports, signaling a major turning point in its financial maturity.

Q4 2025 Financial Highlights: 💰

• Total Revenue: The company reported $87.1 million for Q4 2025, a 36% year-over-year increase (adjusting for the divestiture of its Maximum Effort marketing arm).
• Profitability Turnaround: MNTN swung to a positive GAAP net income of $34.5 million in Q4, a massive improvement from a $4 million loss in the prior year.
• Gross Margin Expansion: Gross margins reached a record 82%, up from 77% a year earlier, highlighting the incredible operating leverage in their software-first model.

Strategic Initiatives and Mergers: 🤝

In early 2026, MNTN made headlines by hiring heavy-hitting veterans from TikTok and NBCUniversal to lead its revenue and content strategies. These hires signify an aggressive push to capture more of the SMB market and secure premium "live" streaming inventory. On the tech front, the company recently launched QuickFrame AI, which uses generative AI to allow brands to create studio-quality TV commercials in minutes, further lowering the barrier to entry for television advertising.

Profitability and Fair Value 🎯

MNTN has officially reached the "profitable growth" phase. With a full-year 2025 Adjusted EBITDA of $68 million and a clean balance sheet featuring $210 million in cash and zero debt, the company is in a position of strength.

Regarding valuation, the stock has experienced significant volatility since its IPO. While its Price-to-Sales ratio (approx. 2.6x) is higher than some traditional media peers, it remains attractive for a software company growing at 30%+ with 80% margins. Many analysts argue the stock is fundamentally undervalued, with some "intrinsic value" models suggesting a fair value north of $25.00—well above its recent trading range near $10.00.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus among Wall Street analysts is a resounding "Buy" or "Strong Buy." In the last 30 days, MNTN has remained a favorite among tech analysts due to its clear path to 2026 profitability.
• Price Targets: The average 12-month price target currently sits at approximately $22.50, representing a potential upside of over 120% from current levels. Top-tier firms like Citizens and Tigress Financial maintain targets ranging from $23.00 to $26.00.

Investor-Focused Takeaway: Is MNTN Right for Your Portfolio?

MNTN represents a "pure play" on the death of linear cable and the rise of ad-supported streaming. It is no longer just a "story" stock; it is now a profitable, cash-flow-positive enterprise with high margins and a massive untapped market of SMBs who previously thought TV advertising was too expensive.

What to Watch in the Near Term: 📈

• 2026 Guidance Execution: The company has guided for 2026 revenue between $345M and $355M. Meeting these targets will be critical for maintaining investor confidence.
• AI Integration: Watch for how QuickFrame AI impacts customer acquisition; if AI can truly automate ad creation, MNTN’s "moat" will widen significantly.
• SMB Sentiment: Monitor general economic data; if small businesses start cutting back on growth spend, MNTN's short-term growth could cool.

Recommendation:

MNTN is a compelling choice for investors seeking exposure to the ad-tech and AI sectors. With its recent shift to profitability and strong analyst backing, it offers a "growth at a reasonable price" (GARP) opportunity in the evolving digital media landscape.

Sprinklr (NYSE: CXM)

Sprinklr (NYSE: CXM) is a leading AI-native platform for Unified Customer Experience Management (Unified-CXM). The company provides a comprehensive suite of software that allows the world’s largest brands to manage customer-facing functions—including social media marketing, advertising, research, and contact center services—within a single, integrated interface. By breaking down data silos between marketing and customer service, Sprinklr enables enterprises to deliver a consistent and personalized experience across more than 30 digital channels.

Business Model and Revenue Streams 📦

Sprinklr’s business model is built on a high-retention, subscription-based SaaS framework tailored for the "Global 2000." The company focuses on large-scale enterprise contracts, which often exceed $1 million in annual recurring revenue (ARR). Its income is generated through two primary segments:

• Subscription Revenue: This is the engine of the company, accounting for roughly 90% of total revenue. Customers pay for access to Sprinklr’s four core product suites: Service, Social, Marketing, and Insights. This recurring model provides high visibility into future earnings and benefits from "land and expand" strategies as clients add more seats or modules.
• Professional Services: Sprinklr earns additional revenue by helping large organizations implement its complex platform, migrate their contact centers to the cloud, and optimize their AI models. While lower margin than subscriptions, these services are critical for ensuring long-term customer "stickiness."

The current macroeconomic landscape has presented a "double-edged sword" for Sprinklr. On one hand, high interest rates and global uncertainty have led some enterprises to delay large digital transformation projects, resulting in a recent deceleration of new subscription growth. On the other hand, the corporate obsession with Efficiency and AI plays directly into Sprinklr’s hands. As companies look to replace multiple expensive "point solutions" with one unified platform to save costs, Sprinklr's Unified-CXM proposition becomes more attractive.

Recent Performance and Corporate Developments 📈

Sprinklr recently reported financial results for its fourth quarter and full fiscal year 2026 (ended January 31, 2026), which showcased a company successfully pivoting toward disciplined profitability.

Q4 2026 Financial Highlights: 💰

• Total Revenue: Revenue hit $220.6 million, a 9% increase year-over-year, beating analyst estimates.
• Subscription Revenue: Rose 6% to $193.4 million, confirming steady demand despite a tougher sales environment.
• Profitability Surge: Non-GAAP operating income jumped to $37.7 million (17% margin), up significantly from $26.3 million (13% margin) in the same period last year.
• Earnings Per Share (EPS): Reported a non-GAAP EPS of $0.13, comfortably exceeding the consensus estimate of $0.10.

Strategic Initiatives and Mergers: 🤝 While there were no major mergers this past quarter, Sprinklr announced a massive $200 million share repurchase program in March 2026. This move, following a year of "operational hardening," signals management’s belief that the stock is currently undervalued. Additionally, Sprinklr was named a Leader in the 2026 Gartner Magic Quadrant for Voice of the Customer platforms, further validating its AI-first approach against legacy competitors.

Profitability and Fair Value 🎯

Sprinklr has successfully transitioned from "growth at all costs" to a "Rule of 40" contender. With a strong cash position of over $500 million and zero debt, the company’s financial health is robust.

In terms of fair value, CXM is currently trading at a significant discount compared to its historical averages and industry peers. With a trailing P/E ratio around 13x—roughly half the software industry average of 27x—the market appears to be pricing in a conservative growth outlook. However, many valuation models, including discounted cash flow (DCF) analyses, suggest an intrinsic fair value closer to $11.00–$13.00, indicating the stock may be deeply oversold at current levels near $6.00.

Analyst Estimates and Ratings 📊

• Consensus Rating: The current consensus is a "Hold," reflecting a "wait-and-see" approach as the company navigates its growth transition. However, there has been a notable uptick in "Buy" interest following the Q4 earnings beat.
• Price Targets: The average 12-month price target is approximately $8.60, with high-side estimates reaching $12.00. Even the more conservative targets (around $6.50–$7.00) suggest a modest upside from current prices.
• Recent Momentum: In the last 30 days, firms like Citizens JMP have maintained "Market Outperform" ratings, highlighting the company’s strong free cash flow and AI leadership.

Investor-Focused Takeaway: Is CXM Right for Your Portfolio?

Sprinklr is currently a "Value-Growth" play. It offers the stability of a profitable, cash-rich software firm with the upside potential of a leader in the generative AI space. While top-line growth has slowed to the high single digits, the expansion of profit margins and aggressive share buybacks provide a safety net for investors.

What to Watch in the Near Term: 📈

• Guidance for FY2027: Management has guided for a "transition year" with revenue growth of roughly 1-3%. Investors should watch for any signs of "beat and raise" quarters that could accelerate a price recovery.
• AI Monetization: Keep an eye on the adoption of Sprinklr Service (its AI-powered contact center solution), which grew 50% last year and is the company’s biggest growth engine.
• Customer Churn: Monitor the "Net Dollar Expansion Rate." Maintaining this above 100% is crucial to proving the platform's value during a macro slowdown.

Recommendation: Sprinklr (CXM) is an ideal candidate for patient investors looking for a "bottoming" play in the software sector. The company is fundamentally stronger than its current stock price suggests, and the $200 million buyback program provides a strong catalyst for price support throughout 2026.

Final Take: The Performance Engine and the Unified Brain of Digital Commerce

The next phase of the digital economy isn't about reaching more people—it’s about reaching the right people with surgical precision. This requires two things: software that turns television into a measurable sales funnel and a unified platform that manages every customer interaction in real-time.

That’s where MNTN (MNTN) and Sprinklr (CXM) stand apart.

📺 MNTN (MNTN) — The Performance Engine of Connected TV

• ✔ Transforming the "living room screen" into a high-conversion, direct-response channel.
• ✔ Record 82% gross margins and a recent swing to significant GAAP profitability.
• ✔ Lowering the barrier to entry for millions of SMBs through AI-driven ad creation.
• ➤ Best for: Investors seeking high-growth, high-margin exposure to the death of linear cable and the birth of programmatic TV.

🧠 Sprinklr (CXM) — The Unified Brain of Customer Experience

• ✔ Consolidating 30+ digital channels into a single, AI-native enterprise operating system.
• ✔ Massive $200 million share buyback signaling deep internal value and stability.
• ✔ The platform of choice for the Global 2000 looking to automate service and marketing.
• ➤ Best for: Value-oriented tech investors looking for a cash-rich, "bottoming" play with massive upside as AI contact centers go mainstream.

Investor Insight

🧩 Want to own t

he future of high-precision, automated TV advertising? → MNTN

⚙️ Want to own the AI-powered "Command Center" for global enterprise scaling? → CXM

Bottom Line:

The software landscape is shifting from fragmented tools to integrated powerhouses. Success in 2026 is measured by efficiency and the ability to prove ROI in seconds, not months.

MNTN owns the performance of the most important screen in the house, while Sprinklr owns the data-driven relationship between a brand and its billions of customers. As enterprise spending focuses on "Applied Intelligence," these two stocks aren't just software providers—they are the infrastructure of modern growth.

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Happy Trading
​— Team Premium Stock Alerts